At the UK's biggest YouTube convention, Tom Burns is having a crisis on multiple fronts. The internet is down at one of the event stalls and his Google Glass isn't working. "It keeps tweeting the wrong things," says the 23-year-old co-founder of the event, frantically tapping the technology on his face, as he rushes off to find a new internet connection.

Welcome to Summer in the City, a sold-out event that will pull in more than 8,500 people to Alexandra Palace, north London, over the next three days. The likelihood is that most of the country will never have heard of this convention, now in its fourth year, or any of the YouTube celebrities that feature on the event's programme.

Yet celebrities they are. Many of the young people wandering the vast hall, among the video gaming stations and life-size Pokémon mascots, are YouTube bloggers who have millions of subscribers and fans around the world. Featuring everything from personal diary posts to beauty tutorials and short films, YouTube is not a just niche hobby – it's a lucrative profession.

For Rebecca Flint, better known as Beckii Cruel, her YouTube videos elevated her to such levels of fame that at 14 she was flown to Japan to work as a model and pop star.

"I started off when I was 12 or 13 years old, making dance cover videos, and they went viral in Japan, so I went to work in Japan as an idol, which is similar to being a pop star, for a couple of years – which was really cool," she explains. "It was somewhere I could never have imagined I'd get to, but YouTube made that happen for me. I now blog on beauty, or hair, or gaming – whatever I feel like, to be honest. This week I've done a video every single day."

With 91,000 subscribers and almost 20m total views, and one of her dance videos boasting 4m views alone, Flint, just 19, certainly falls into the category of YouTube celebrity, and her blogging empire is still expanding.

"I think the appeal of YouTube is that it's a very personal relationship that people feel they form with their viewers," she says. "It's a different kind of celebrity. Kids now trust their YouTube stars more than regular celebrities with endorsement."

The origins of Summer in the City go back to 2007, when a group of around 20 YouTube creators gathered for an informal meeting in central London. The number of attendees grew, and in 2009 Burns, then 17, along with friends David Bullas, Liam Dryden, Jazza John and Luke Cutforth, decided to create an official event that would be the British equivalent to VidCon, the world's largest online video convention, held annually in California.

Burns says: "It was nice at the beginning because it was all like-minded people who shared the same interests, so very small scale. We would meet in Green Park, or Hyde Park or Jubilee Gardens, and then in the evening we would hire out a venue. Only about 100 people showed up for the first event, but there were people coming from Australia, America, mainland Europe, just for this first event, and by the end of it there was a part of me that thought: 'This is phenomenal, this is something special. We can't just leave it at this.'"

After 600 fans of one YouTuber, Charlie McDonnell, mobbed the 2011 event, it moved to a more formal venue. It was then that YouTube got in touch, offering sponsorship, and enabling the organisers to stage their first event indoors at a London brewery and then, after 3,000 people turned up to the 2,000-capacity venue, to move it to Alexandra Palace.

Burns says the enormous popularity of Summer in the City was a testament to how YouTube is breaking into the mainstream and establishing itself as an increasing influence on popular culture. Indeed, it is so popular the organisers are now in talks to hold the event twice a year to meet demand, with two-thirds of the Summer in the City attendees now made up of fans rather than creators.

"Last year we sold 7,000 tickets for the weekend; this year we've sold 8,500," he says. "But it's still very much a networking event for the geeky kids who like making and watching YouTube videos online. When I first started YouTubing it was sort of joked about and I was mocked for it, but now everyone wants to get involved. Attitudes are changing, and people's perception of YouTube is changing."

The platform's power also lies, he says, in the profitable sponsorship deals that mean some bloggers are raking in six-figure incomes from video diaries. Jenna Marbles, a YouTube personality who makes self-deprecating personal blogs, including the viral video Drunk Makeup Tutorial, has accrued 1.5bn video views and makes up to £846,000 a year from YouTube sponsorship and ad revenue. Tyler Oakley, a 25-year-old vlogger and key guest at this year's Summer in the City, has more than 215m total video views and makes an estimated £579,000 a year from his YouTube videos. Oakley is such a celebrity that when approached at the event by the Guardian, his comment was simply: "All interviews go through my agent."

While Friday for industry only, Saturday is open to the devoted masses. In the cavernous hall of Alexandra Palace, recently host to bands such as Bastille and Disclosure, huge numbers of barriers have been erected in preparation for the throngs who will attends the weekend's talks, meet-and-greets and signings with stars such as Oakley and Marbles. Another YouTube star lined up for the meet-and-greets is PJ Ligouri, known for his channel KickthePJ where he has been making short films for the past seven years and has accrued over 30 million views in that time.

"I'm a veteran YouTuber and I mostly make short films with strange and surreal stories, with dark, fantastical comedy and based in made-up worlds" he explained. "It feels really good that that many people watch my videos, and I've done it since I was 16. I think the momentum is growing and more people are recognising YouTube as a legitimate and successful platform in it's own right, to post really good content. As a creator, you get to cater to what your audience want. So it's not a passive experience, you get instant feedback from likes and comments and you can respond and be influenced by that."

The impact of these YouTube celebrities on the music industry is also a hot topic of discussion at Summer in the City. While previously considered ripe ground for record label talent-spotting, with Justin Bieber being the most cited example, the freedom and popularity of YouTube is now encouraging mMusicians to shunning shun the labels altogether as they become famous without ever leaving their parents' garage.

The band Area11 have already sold 12,000 copies of their album and embarked on a sell-out tour, solely through a dedicated YouTube following: "We've just passed 100,000 subscribers," says Sparkles, one of their members. "We are a traditional rock band, in that we go on tours, but we use YouTube to keep our freedom. We don't have a record label, we don't have management, we do it all ourselves. There's nothing at the moment that could persuade me to sign to a label. We get to keep full control of our image, what we write, what we put out. YouTube has already changed the landscape of the music industry and I think YouTube is just growing in momentum."